Right to buy mortgage (with no deposit)
In this brief blog we will cover getting a right to buy mortgage with no deposit.
If you want to get a right to buy mortgage but are struggling to save up a mortgage deposit then you may be able to get a right to buy mortgage with no deposit.
If you are concerned you wont be able to get a right to buy mortgage without any deposit then you may want to speak to a right to buy mortgage broker to see what your mortgage options may be .
What is the right to buy scheme?
The right to buy scheme is a government scheme which allows council tenants in England to buy their council homes at a discount.
How do you get a right to buy mortgage with no deposit?
In most cases, the discount given to you would be accepted as a mortgage deposit by the mortgage lender. The only exception would be if you have bad credit issues which require you to put down a larger mortgage deposit.
Different mortgage lenders have varying criteria on their right to buy mortgages and this means there are some right to buy mortgage lenders who will require a mortgage deposit of between 5% to 10%.
In theory you should be able to get a right to buy mortgage with no deposit.
When may you need a right to buy mortgage deposit?
You may need a right to buy mortgage deposit if the following applies.
If you have bad credit the mortgage lender may require you to put down a right to buy mortgage deposit.
If you are a self-employed borrower then the right to buy mortgage lender may require you to put down a mortgage deposit to reduce the risk to them y reducing their loan to value.
If you are buying a non-standard construction property then you may be required to put down a mortgage deposit with your right to buy mortgage
The right to acquire scheme
The right to acquire scheme is similar to the right to buy mortgage but is is aimed towards housing association tenants. With the right to acquire scheme you can also get a right to acquire mortgage with no mortgage deposit.
Alternative Government schemes
Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.
Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.
Government schemes are not available to you if you are getting a buy to let mortgage.
The Government schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.